Andrei Kostin gives a report on results in 2009.
VTB was the first Russian bank to announce its performance results for 2009. The bank received a net profit of 28 billion roubles under the Russian Accounting Standards (RAS), exceeding the level of 2008, the bank's President, Andrei Kostin, reported to Prime Minister Vladimir Putin. However, experts believe that the findings are not indicative and expect the bank to report losses under international accounting standards.
Prime Minister Vladimir Putin met with VTB President Andrei Kostin yesterday to discuss the bank's performance in 2009. "The group's parent organization, the VTB bank, received a net profit of 28 billion roubles," Mr. Kostin said adding that it was slightly above the bank's net profit of 26.3 billion roubles under the RAS in 2008. The bank's President stressed that three of the bank's subsidiaries, VTB24, VTB Capital, and VTB Northwest earned 15 billion roubles in 2009, with VTB Capital investment bank accounting for 6 billion roubles.
Mr. Kostin did not specify where the profit under the RAS came from in 2009. The bank moved out from the red under the RAS in autumn. VTB's net profit under the RAS totaled 31.88 billion roubles over eleven months. The bank said that November's net profit came from "charges and interests on provided loans and restored loss provisions." VTB's President said yesterday that the reserves were lower than they had expected. "The credit portfolio now has reserves of about 6.4%, which does not threaten the bank's stability," Mr. Kostin gave assurances. He added that ‘bad debts' did not pose any threat, despite the fact that they could increase. All in all, the bank's credit portfolio grew by 11% in 2009.
Experts point out that VTB's results under the RAS are not indicative and that only results under the International Financial Reporting Standards (IFRS) can give an objective view of the situation. "The IFRS use consolidated reporting and unlike the RAS take account of profits, expenses, reserves, and risks," senior analyst at Uralsib, Leonid Slipchenko, says. Olga Belenkaya, analyst for Sovlink Investment Company, believes that VTB will report a loss under the IFRS. VTB Group reported a net loss of 45.5 billion roubles under the IFRS for nine months of 2009 (see Kommersant of December 18, 2009). Mr. Slipchenko believes that the bank's net loss for the whole year under the IFRS may reach 50 billion roubles.
However, Andrei Kostin said that this year the bank planned to restore profits to the level of 2007. "This will be a year of a post-downturn and progressive development," VTB's President said yesterday. "We are rethinking our policy and planning to focus on medium-size businesses, first of all, in the regions." He added that the bank expected a 25% portfolio increase in 2010. Olga Belenkaya believes that the increase plans are rather aggressive and that VTB Group's parent bank can achieve them by cutting its interest rates and actively providing government-underwritten loans for the country's backbone enterprises. Andrei Kostin also said yesterday that if the government continued to fight inflation, interest rates would go down to pre-downturn levels. The bank's interest rates for large enterprises currently vary from 10% to 10.5% per year.
By Nailya Asker-zade
